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Solar Investment Tax Credit (ITC)

The Federal Investment Tax Credit (ITC), also known as the Solar Investment Tax Credit, is a tax credit that homeowners are eligible for when they install a solar system. If a homeowner installs their new solar system in 2019, they can claim a 30% tax credit on their 2019 tax return. For example, if your total solar system cost is $10,000 (including equipment, labor, permits, etc…) then you can claim a $3,000 tax credit in 2019. While you still need to pay your installer $10,000, you will owe the federal government $3,000 less in taxes for 2019.

Does Everyone Qualify?

If you did not purchase your solar system outright, perhaps because you chose to go solar with a lease or a power purchase agreement (PPA), then you will not be eligible for the tax credit. Typically, in a lease, or a PPA, the solar system is owned by someone other than the homeowner and that organization will get the benefit of claiming the tax credit. As compensation, the homeowner often receives a discounted price.

Being a tax credit, people who owe no federal taxes unfortunately are not able to make use of the tax credit benefit. In that case a PPA may be a better option. Or, if you can generate taxable income in the year you go solar (perhaps by selling some appreciated assets or converting a Traditional IRA to a Roth IRA) then you might make use of the tax credit.

As with all tax matters, please consult your tax advisor!

Keep in mind that if you don’t have enough tax liability to use all of the tax credit in one year you can roll it over to future years for as long as the tax credit is in effect.

Is the ITC Phasing Out?

As of January 1, 2020, the tax credit will be reduced to 26%, then on January 1, 2021 it is reduced to 22%. Any residential projects started on January 1, 2022 or later will not receive a tax credit (commercial projects still receive 10%).

A residential solar installation must be placed into service by the end of 2019 to receive the 30% tax credit. This typically means that you need Permission to Operation (PTO) from the utility before the end of the year. As on all tax matters, please consult your tax advisor.

Don’t wait too long to get your project on your installer’s calendar – their workload is likely to increase as these deadlines approach!

Will the ITC Get Extended?

While it is true that the ITC has been extended several times in the past, whether it will be extended again is anyone’s guess.

Has the ITC been effective?

According to the Solar Energy Industries Association, since the ITC was enacted, solar deployment has had a 59% compound annual growth rate. Over 60 GW of solar PV has been installed in the US, enough to power 11 million homes, and over 250,000 people now work in the solar industry. This boost in affordability from the ITC as spurred interest in the technology which in turn has made a market that is competitive and innovative.

As with all tax matters, please consult your tax advisor!

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Solar and Electric Vehicles (PV + EV)

With a rooftop solar system generating clean energy, and an EV using clean energy, you can enjoy a superb alternative to dirty expensive electricity and dirty expensive transportation at the same time.

Natural gas still provides about half of all electricity generated in California. While natural gas is promoted (most loudly by the natural gas producers) as much cleaner than coal, several recent studies have shown that leakage through the exploration and production process from drilling to storage to transportation to refining and combustion in power plants, may release as much greenhouse gas per unit of energy as coal. Although less toxic than coal, natural gas can pollute the water (such as the infamous “Light Your Water on Fire” YouTube video) and air (such as with the 2105 Aliso Canyon gas leak in California) .

Once rooftop solar panels are installed, you’ll start generating 100% clean energy. This will continue for at least the 25-year warranted life of the solar panels. When you charge your EV at your solar-powered home, you won’t be sending energy directly from your panels to your car (especially when you charge at night!), but you’ll be driving with “net zero carbon” by providing as much energy to the grid as you take from the grid.

When your EV is charged with solar energy, you can drive your clean, quiet, responsive, low maintenance, conversation-starting EV in the carpool lanes and express lanes even as a solo driver. The Bay Area is fortunate to have many public charging stations, with more on the way, and there are now several models of EV with a range of over 100 miles:

Audi eTron – 204 miles

BMW i3 – 153 miles

Chevrolet Bolt – 238 miles

Ford Mustang Mach-E – 230 miles

Hyundai Ioniq – 124 miles

Hyundai Kona EV – 258 miles

Jaguar I-Pace – 234 miles

Kia Niro EV – 239 miles

Nissan LEAF – 150 miles

Nissan LEAF PLUS – 226 miles

Tesla Model 3 Long Range – 310 miles

Tesla Model 3/ Standard Range – 240 miles

Tesla Model S Long Range – 370 miles

Tesla Model S Standard Range – 285 miles

Tesla Model X Long Range – 325 miles

Tesla Model X Standard Range – 255 miles

VW e-Golf – 125 miles

What does it cost to drive these EVs on sunshine?

To get started, there’s one number that’s handy to know: 3.5 to 4 miles per kilowatt-hour (kWh). Just about every electric car will go 3.5 to 4 miles per kWh. Unlike gasoline cars (known to EV drivers as ICE cars, for Internal Combustion Engine), which range from under 10 miles per gallon to over 50, EVs have very similar efficiency ratings. A 100 horsepower Leaf and a 500 horsepower Tesla both travel 3.5 to 4 miles per kWh. The Nissan Leaf with a 30-kWh battery will go about 107 miles. That’s 3.6 miles per kWh.

How much does your electricity from the grid cost? You can determine this from your PG&E bill. The Bay area EV off-peak average is about 12¢ per kWh, and 12¢ worth of grid power would drive your Leaf 3.6 miles. That’s 3.3¢ per mile.

How much does an ICE car cost in fuel? Say you have a 30 MPG car. California just raised the price of gas by 12¢ per gallon and the average in the bay area is now a little over $3/gallon. 30 MPG at $3/gallon means your fuel cost is 10¢ per mile. Great, your EV is already 67% cheaper using grid power!

How much does electricity from your solar panels cost? This involves dividing the total cost of your solar system by the total number of kilowatt-hours (kWh) it will produce over its warranted 25-year lifetime. It will depend on the price of your solar, and the math is a little complex for this article. However, a typical SunWork system, such as our 500th installation was $7,286 for 3.48 kilowatts. Add $1,000 for an inverter that will need replacement over 25 years because in this case, the inverter has a 10 year warranty. The 3.48 kW system will produce about 115,000 kWh over 25 years. Divide $8,286 by 115,000 kWh means the 25-year cost of electricity will be 7.2¢ per kWh. This is one third the cost of grid electricity now, and it’s set for 25 years, while PG&E rates are likely to climb.

Cost per mile

At 7.2¢ per kWh for solar and an EV’s 3.6 miles per kWh, that’s 2¢ per mile, which is 20% of the cost of the ICE car. And that’s just the “fuel.” In an EV there’s no need to change the oil, there are no valves or pistons or intake manifolds or catalytic converters or fuel injection systems, or smog checks. There’s barely a transmission in an EV since most have just one gear.

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The Federal Investment Tax Credit (ITC), also known as the Solar Investment Tax Credit, is a tax credit that homeowners are eligible for when they install a solar system. If a homeowner installs their new solar system in 2019,

Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid” according to the Solar Energy Industries Association (SEIA). Net Metering is short for Net Energy Metering (NEM). NEM basics: During the day, your solar system generates energy. When you’re away, most of your solar energy

Community Choice Energy (CCE) programs are rolling out throughout California, which in the Bay Area will replace PG&E as the supplier of electricity for most residence and business. PG&E is still responsible for transmission, distribution and billing,

The California’s Solar Rights Act was passed in 1978 and it allows Home Owner Associations (HOAs) to impose “reasonable restrictions” on solar systems, however, it prevents HOAs from disallowing solar on homes. In 2014 the act was amended to define the nature of the restrictions that an HOA can impose. Such restrictions can’t:

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